Wal-Mart gives up; shuts down Video Download Service

Wal-Mart Stores Inc., the world's largest retailer, has pulled the plugs on its video-downloading service last week after its technical partner Hewlett-Packard discontinued the technology that supported the service.

Wal-Mart’s move comes a less than a year after it decided to sell digital movies and television shows on its Web site. The giant retailer unveiled its own online digital store for downloading films and TV shows earlier this year in February. With the move, Wal-Mart had become the first traditional retailer to do so, and entered into direct competition with established sites like Amazon.com, CinemaNow and iTunes.

Wal-Mart started the online video store with digital versions of about 3,000 films and television episodes from all the major studios and some TV networks. Using its buying power to beat the prices charged by other download services, digital download were made available by from $12.88 to $19.88 on the day of the DVD release. While older movies retailed at $7.50 and TV shows at $1.96 an episode.

Industry analysts criticized Wal-Mart’s latest move to close its online movie download service after starting it less than a year ago. “They gave up,” said Michael Pachter, who analyzes consumer-electronics stocks for Los Angeles-based Wedbush Morgan Securities. “Wal-Mart occasionally makes these mistakes, assuming that because they sell the greatest percentage of everything, they can succeed at any new business line.”

This is not the first time the Bentonville, Arkansas- based Wal-Mart has ended one of its services instead in 2005 the retailer had closed its digital DVD rental store.

In fact, what forced the company to shut down the online movie download service so soon was the Palo Alto, California-based Hewlett-Packard’s decision to stop providing the software for running the site.

In an announcement, HP spokesman Hector Marinez has announced that they will discontinue the merchant services that provide video-only downloads, as the company witnessed the decline in the online video business.

Wal-Mart shares jumped 32 cents to $48.09 at 3:09 p.m. in New York Stock Exchange composite trading, while Hewlett-Packard shares dipped 23 cents to $51.38.